Critical Reasoning

Technological improvements and reduced equipment costs have made converting solar energy directly into electricity far more cost-efficient in the last decade. However, the threshold of economic viability for solar power (that is, the price per barrel to which oil would have to rise in order for new solar power plants to be more economical than new oil-fired power plants) is unchanged at thirty-five dollars.

Which of the following, if true, does most to help explain why the increased cost-efficiency of solar power has not decreased its threshold of economic viability?

A. The cost of oil has fallen dramatically.
B. The reduction in the cost of solar-power equipment has occurred despite increased raw material costs for that equipment.
C. Technological changes have increased the efficiency of oil-fired power plants.
D. Most electricity is generated by coal-fired or nuclear, rather than oil-fired, power plants.
E. When the price of oil increases, reserves of oil not previously worth exploiting become economically viable.

OE C
I Think it should be A

akash singhal wrote:OA C I Think it should be A

Hi Akash.

You got smoked by a typical GMAT trick answer.

The prompt discusses that the cost of solar has gone down and you saw that answer choice saying that the price of oil has fallen and it just seemed right, but seeming right will not get you the right answers to CR questions. You have to really see the logic of what is going on.

In this case, the logic of what is going on is that WHATEVER THE CURRENT PRICE OF OIL, there is a price of oil, $35, at which new solar plants become more economical than new oil-fired plants.

If the price of oil currently is $10, the price needs to go to $35 for the new solar plants to be more economical than the new coal fired plants. If the price is $50, then the new solar plants will be more economical than new oil-fired plants as long as the price stays greater than or equal to $35.

So A is irrelevant, because the point is not about the current price of oil. The point of the prompt is that even though the cost of solar equipment is lower, the price of oil still has to be $35 for new solar to be more economical than new oil-fired plants.

Notice something. We are comparing new solar powered plants to new oil-fired plants.

Now let's look at the other answer choices.

B) This is not relevant to answering the question. It doesn't matter why solar power equipment costs less. We are talking about the relative costs of solar powered and oil-fired plants.

C) There you have it. The cost of solar equipment has gone down, but the cost of operating new oil-fired plants has also gone down. Since the costs of both have gone down, the price at which solar is more economical than oil-fired has stayed the same.

D) This is irrelevant to what we are discussing, which is merely the relative costs of solar and oil-fired power generation.

E) This does nothing to explain why the price at which solar power becomes more economical has not changed.

So clearly C is the only answer choice that actually explains why the threshold of economic viability has not changed.